Essay on Walmart Goes South
Globalization is the overall process, which does not leave anyone and anything out of the way. Retailing business is not the exception, and Wal-Mart’s Mexico (Walmex) experience is the best evidence to this fact. Let’s line out the main points about Walmex case. Wal-Mart’s international expansion is rooted to 1991, when greatest U.S retailer entered the market of Mexico. It took the status of joint venture with leading Mexican retailer – GrupoCifra SA CV (Cifra). In 1997, Wal-Mart Mexico begins its independent operating by acquiring major stake in groupCifra. From that time, it is considered the №1 Mexico retailer and first Mexico private employer from 2004(Blake, 1).On March 2011, there are 1, 752 Walmex Retail Units all over the country.
The history of Wal-Mart’s Mexico success raises plenty of disputable questions about the main premises. The effect of NAFTA agreement seems one of the most relevant to be answered. The far reaching agreement of 1994 hardly can be overrated with its value for Wal-Mart’s prosperity. However, this value is doubtful to be at first-hand useful for Mexico success. NAFTA agreement eliminated plenty of restrictions for foreign business, including the most important points about tariffs and imports controls (Juhasz, 1). Therefore, we are encouraged to talk about inverse interconnection – Mexico operating became profitable for retail business in U.S.. The point is in much more costless Mexican producing process, which is featured by cheap labor, low taxes, extremely tolerant state’s insight etc.. Therefore, Wal-Mart is able to import Mexican goods to U.S. and sale them on much lower prices, if these goods were produced at home. This pattern of outstanding profits making is clear enough, but it doesn’t answer the question what led to Wal-Mart Mexico success primarily. Being aimed to emphasize the main points, there is the claim that the story of Wal-Mart’s Mexico success is the kind of symbiosis of extremely well-turned entering policy and the some kind pioneer status. As the first one, it supported by numerous experts, who consider Wal-Mart’s co-operation with Cifra the main condition for the greatest retailer adaptation. This co-operation gave the general view about specifics of Mexican market and made U.S retailer right-turned to meet customers’ needs and wants (Blake, 2). On the other hand, low price policy instantly met serious opposing from the side of suppliers and small vendors. The status of U.S. retail pioneer and positive reputation became useful with these circumstances. This claim is explained by strong support of Mexican government, which was interested in U.S. big retailer inside the state that is capable to provide high-quality products on absolutely affordable prices. Appropriate condition was critical to overcome at first meeting protests and growing resentment.
Is any post-NAFTA retail U.S. company able to repeat the history of Walmex? Seemingly, no. Frankly, Wal-Mart appeared at the right time, at the right place. Moreover, it became widely adopted in Mexico, due to fresh view and unprecedented marketing strategies at that times. It is supposed that any of other U.S. retailer won’t be so stressful in Mexico market today. Moreover, it has to be considered that domestic Mexican retailers have learned much from the experience of Western business trends, to make their business competitive to Walmex. Let’s take some look at one of them.
ControladoraComercial Mexicana, S.A. de C.V. is the second retail giant all over the Mexico. It’s annual sales accounted for 27.16 billion pesos (US$2.86 billion) annually. The entire amount of employees is 32 thousands of people. To stay competitive to Walmex retailer, Comercial Mexicana wasn’t too creative with its approach. The general strategy is focused to successful experience repeating. In this order, such directions as database management focus, supply chain improvement, store interiors and design, customer care became essential for the general policy. Moreover, not so long time ago the administration announced significant shift of marketing strategy. It can be called as “Low Prices Always,” what is absolutely the same in fact toWalmex’s “Everyday Low Prices”. However, Comercial Mexicana S.A. is not going to abandon their well – known “temporary sales promotions” completely. Regarding this fact, popular retailer’s campaigns about “annual sales” will still be carried out(Khurana, 1). This step looks rather reasonable as combination of well-adopted traditions and best innovative incomes will be useful to make this company interesting and outstanding for customers. At second, Comercial Mexicana S.A. proclaimed the course to centralized distribution, which will be helpful to establish better contacts to suppliers. These facts are convincing to claim that Comercial Mexicana is in constant search for ways to compete Walmex. What could be suggested to Comercial Mexicana S.A. to improve its competitiveness? Its marketing policy innovations seems to be absolutely reasonable, but it has to be noted that appropriate company has to compete with international retailer, with its units in 15 countries all around the globe. So, what about the look abroad? This step seems to be reasonable for business expansion and new incomes raising. The Walmex’s Mexican goods import experience is useful to convince that international activities are helpful to get extra profits and additional resources for further entire development. If NAFTA market are not prospective for Comercial Mexicana indeed, other regions of Latin America look suitable for expansion and competitiveness increasing consequently.
